At, Customs Excise Service Tax Appellate Tribunal New Delhi
By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA (PRESIDENT) & THE HONORABLE JUSTICE: V. PADMANABHAN
For Petitioner: R.M. Saxena, Advocate And For Respondents: H. Saini, DR
1. The present appeal is filed against the Order-in-Appeal No. 272/2016-17 dated 29/12/2016
2. The brief facts of the case are that M/s. Mahabir Steel Tubes set up a unit at Khasra No. 103, Village-Raipur, Roorkee in the year 2008 and were availing the benefit of Notification No. 50/2003 CE dated 10/06/2003. The benefit of Notification was available to M/s. Mahabir Steel Tubes up to 1/12/2018. During the course of availing the said exemption Mahabir Steel Tubes became defunct and they did not get suitable orders to manufacture and during the period 2015-16, no manufacture happened and nil returns were filed on a quarterly basis. On 07/01/2015 M/s. Mahabir Steel Tubes entered into an agreement with M/s. Wonder Fibromat Pvt. Ltd. for leasing out a part of the area in which unit was functioning. However, rest of the area was retained with them for purposes of keeping the machinery and for storing plant machinery and stock. On 5/01/2016, the present appellant M/s. R.J.S. Infotech Pvt. Ltd. took over the unit M/s. Mahabir Steel Tubes and relocated the factory to the premises 106-108 in Salempur Industrial Area, Roorkee. This area was also covered within the area specified under Notification No. 50/2003 CE dated 10/06/2003. The appellant also claimed benefit of Notification 50/2003 but the same was denied by both the Revenue authorities below. The Revenue had taken the view that the entire premises was occupied by M/s. Mahabir Steel Tubes was leased to M/s. Wonder Fibromat Pvt. Ltd. and the original unit was not functioning on the date when the same was taken over by the present appellant. Accordingly, the benefit of Notification was denied. Aggrieved by the impugned order, present appeal has been filed.
3. With the above background we heard Shri R.M. Saxena, Ld. Counsel for the appellant and Shri H. Saini, Ld. DR for the Revenue.
4. The Ld. Counsel for the appellant submitted that the Revenue has proceeded on the wrong assumption that the entire area originally occupied by M/s. Mahabir Steel Tubes was leased out to M/s. Wonder Fibromat Pvt. Ltd. In the impugned order, the space retained by M/s. Mahabir Steel Tubes has been shown as 300 feet but in fact 3000 square feet was retained by them. He admitted that the unit was facing difficulty commercially but the plant and machinery which was originally used by M/s. Mahabir Steel Tubes was transferred to the new premises of R.J.S. Infotech Pvt. Ltd. To this effect, due intimation has been filed by the appellant to the department along with the copy of the Chartered Engineer's certificate as per the Trade Notice No. 7/2012 dated 2/5/2012. He claimed that the Board's circular No. 960/03/2012 CX3 dated 17/2/2012 has clarified that the benefit of Notification 50/2003 will continue to be available to the new unit which has purchased the original unit availing such benefit. The benefit of the Notification cannot also be denied if the original unit is shifted to some other area which also falls within the area notified in the notification. Accordingly, he submitted that the appellant will continue to be eligible for the benefit of the Notification.
5. Ld. DR justified the impugned order. He submitted that the benefit cannot be extended to the appellant in as much as the original unit was not operational but had become defunct and hence, what has been started by the appellant cannot be considered as the original unit continued in the new premises.
6. We have heard both sides and perused the record.
7. In connection with the Notification 50/2003 the CBEC vide Circular dated 17/02/2012 has clarified the circumstances in which the notification benefit will continue to be available. The Circular provides for shifting of the unit which is availing such benefit to some other area which also is notified under the same notification. The circular makes it clear that the benefit cannot be denied for on account of such shifting. The circular also provides for cases in which the ownership of the unit is changed and taken over by another unit. In such cases also the benefit cannot be denied to the purchaser of the original unit.
8. In the present case, both circumstances co-exist. The present appellant has purchased the unit from M/s. Mahabir Steel Tubes and has also transferred the unit to a new site. The reason cited by the revenue for denying the benefit is that the unit was not functional at the original place before it was shifted. From the record available we notice that certain portion of the original factory continued to exist in the name of M/s. Mahabir Steel Tubes on the date on which the unit was taken over and subsequently shifted. The Ld. Counsel for the appellant has also asserted that the same machinery was shifted to the new premises and to this extent the Chartered Engineer certificate was produced before the Revenue Authorities but the same has not been considered and discussed by both the authorities below.
9. The Board Circular has also emphasized the fact that at the time of shifting of the unit to a new premise the issue needs to be considered on a case to case basis and the fact that the same plant and machinery, equipment and manpower has been relocated in the new premises is required to be verified. We find that the benefit of exemption will be available to the new unit provided they are able to satisfy the revenue authorities that it is the same machinery which has been shifted to the new premises. The relevant Chartered Engineer's Certificate furnished by the appellant does not appear to have been considered and discussed by both the authorities below. We feel it is necessary, in the interest of justice, that the said Chartered Engineer's Certificate is t
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o be considered and the fact verified and established that the same unit has been physically shifted to a new premises. For this purpose, we set aside the impugned order and remand the matter to the Original Authority for considering the observations as above and to pass de novo orders on the subject. No doubt effective opportunity for hearing to the appellant should be given and the submission duly considered before passing orders in proceedings. 10. In the result, impugned order is set aside and appeal filed by the appellant is allowed by way of remand. [Order Dictated and Pronounced in the open court]